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Bridgewater Bancshares, Inc. Announces First Quarter 2019 Earnings

Company Release - 4/25/2019 7:05 AM ET

BLOOMINGTON, Minn.--(BUSINESS WIRE)--
Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent
company of Bridgewater Bank (the Bank), today announced net income of
$7.0 million for the first quarter of 2019, an 18.0% increase over net
income of $6.0 million for the first quarter of 2018. Net income per
diluted common share for the first quarter of 2019 was $0.23, which was
equal to net income per diluted common share in the same period in 2018,
due to the impact of the issuance of shares in connection with the
Company’s initial public offering in March of 2018.

“Bridgewater is off to a strong start in 2019,” noted Chairman, Chief
Executive Officer, and President, Jerry Baack. “We are particularly
pleased with our controlled loan growth of $59 million, or 14% on an
annualized basis, and very strong deposit generation of $83 million, or
21% on an annualized basis. While our market remains fiercely
competitive with regional players continuing to enter, our deposit
growth initiatives have never been stronger. New client relationships
continue to be attracted to our local leadership and simple solutions.”

First Quarter 2019 Financial Results

Basic

Diluted

Adjusted

Tangible book

ROA

ROE

Earnings per share

Earnings per share

Efficiency ratio (1)

value per share (2)

1.42

%

12.60

%

$

0.23

$

0.23

43.1

%

$

7.58

(1)

Ratio excludes the amortization of tax credit investments and
represents a non-GAAP financial measure. See "Non-GAAP Financial
Measures" for further details.

(2)

Represents a non-GAAP financial measure. See "Non-GAAP Financial
Measures" for further details.

Highlights

Net income was $7.0 million for the first quarter of 2019 compared to
$6.0 million for the first quarter of 2018, an increase of 18.0%.

Diluted earnings per common share was $0.23 for the first quarter of
2019, which was equal to the first quarter of 2018, due to the impact
of the issuance of shares in connection with the Company’s initial
public offering in March of 2018.

Tangible book value per share, a non-GAAP financial measure, increased
5.0%, or $0.36, to $7.58 at March 31, 2019, compared to $7.22 at
December 31, 2018. Year-over-year tangible book value per share
increased 16.7%, or $1.09.

Annualized return on average assets (ROA) and return on average common
equity (ROE) for the first quarter of 2019 were 1.42% and 12.60%,
respectively, compared to annualized ROA and ROE of 1.48% and 16.16%,
respectively, for the first quarter of 2018.

Gross loans increased $58.7 million, or 14.1% on an annualized basis,
to $1.72 billion in the first quarter of 2019. Year-over-year gross
loans increased $318.2 million, or 22.6%.

Deposits increased $82.7 million, or 21.2% on an annualized basis, to
$1.64 billion in the first quarter of 2019. Year-over-year deposits
increased $290.6 million, or 21.5%.

Nonperforming assets to total assets remained the same at 0.08% for
the first quarter of 2019 compared to the first quarter of 2018.

Adjusted efficiency ratio, a non-GAAP financial measure which excludes
the impact of the amortization of tax credit investments from
noninterest expense, was 43.1% for the first quarter of 2019, compared
to 42.8% for the first quarter of 2018.

Key Financial Measures

As of and for the Three Months Ended

As of and for the Three Months Ended

March 31,

December 31,

March 31,

March 31,

2019

2018

2019

2018

Per Common Share Data (1)

Basic Earnings Per Share

$

0.23

$

0.26

$

0.23

$

0.23

Diluted Earnings Per Share

0.23

0.25

0.23

0.23

Book Value Per Share

7.70

7.34

7.70

6.62

Tangible Book Value Per Share (2)

7.58

7.22

7.58

6.49

Basic Weighted Average Shares Outstanding

30,097,638

30,072,003

30,097,638

25,755,764

Diluted Weighted Average Shares Outstanding

30,706,736

30,506,824

30,706,736

26,171,433

Shares Outstanding at Period End

30,097,674

30,097,274

30,097,674

30,059,374

Selected Performance Ratios

Return on Average Assets (Annualized)

1.42

%

1.58

%

1.42

%

1.48

%

Return on Average Common Equity (Annualized)

12.60

14.30

12.60

16.16

Return on Average Tangible Common Equity (Annualized) (2)

12.81

14.55

12.81

16.59

Yield on Interest Earning Assets

4.99

4.96

4.99

4.76

Yield on Total Loans, Gross

5.27

5.27

5.27

5.11

Cost of Interest Bearing Liabilities

2.06

1.92

2.06

1.37

Cost of Total Deposits

1.46

1.32

1.46

0.92

Net Interest Margin (3)

3.54

3.62

3.54

3.77

Efficiency Ratio (2)

44.1

60.0

44.1

42.8

Adjusted Efficiency Ratio (4)

43.1

42.1

43.1

42.8

Noninterest Expense to Average Assets (Annualized)

1.59

2.25

1.59

1.61

Adjusted Noninterest Expense to Average Assets (Annualized) (4)

1.55

1.58

1.55

1.61

Loan to Deposit Ratio

104.9

106.7

104.9

103.9

Core Deposits to Total Deposits

75.8

74.2

75.8

74.5

Tangible Common Equity to Tangible Assets (2)

11.16

11.03

11.16

11.64

Capital Ratios (Bank Only)

Tier 1 Leverage Ratio

10.88

%

10.82

%

10.88

%

11.51

%

Tier 1 Risk-based Capital Ratio

11.71

11.63

11.71

12.67

Total Risk-based Capital Ratio

12.83

12.76

12.83

13.86

(1)

Includes shares of common stock and non-voting common stock. On
October 25, 2018, the Company exchanged shares of common stock for
all of the outstanding shares of non-voting common stock. Following
the exchange, no shares of non-voting common stock were outstanding.

(2)

Represents a non-GAAP financial measure. See "Non-GAAP Financial
Measures" for further details.

(3)

Amounts calculated on a tax-equivalent basis using the statutory
federal tax rate of 21%.

(4)

Ratio excludes the amortization of tax credit investments and
represents a non-GAAP financial measure. See "Non-GAAP Financial
Measures" for further details.

Selected Financial Data

March 31,

December 31,

March 31,

March 31,

(dollars in thousands)

2019

2018

% Change

2019

2018

% Change

Selected Balance Sheet Data

Total Assets

$

2,048,111

$

1,973,741

3.8

%

$

2,048,111

$

1,681,597

21.8

%

Total Loans, Gross

1,723,629

1,664,931

3.5

1,723,629

1,405,420

22.6

Allowance for Loan Losses

20,607

20,031

2.9

20,607

17,121

20.4

Goodwill and Other Intangibles

3,630

3,678

(1.3

)

3,630

3,821

(5.0

)

Deposits

1,643,666

1,560,934

5.3

1,643,666

1,353,036

21.5

Tangible Common Equity (1)

228,145

217,320

5.0

228,145

195,218

16.9

Total Shareholders' Equity

231,775

220,998

4.9

231,775

199,039

16.4

Average Total Assets - Quarter-to-Date

2,011,174

1,948,909

3.2

2,011,174

1,625,749

23.7

Average Common Equity - Quarter-to-Date

225,844

215,254

4.9

225,844

149,318

51.3

(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial
Measures" for further details.

For the Three Months Ended

For the Three Months Ended

March 31,

December 31,

March 31,

March 31,

(dollars in thousands)

2019

2018

% Change

2019

2018

% Change

Selected Income Statement Data

Interest Income

$

24,267

$

23,988

1.2

%

$

24,267

$

18,710

29.7

%

Interest Expense

7,136

6,546

9.0

7,136

3,947

80.8

Net Interest Income

17,131

17,442

(1.8

)

17,131

14,763

16.0

Provision for Loan Losses

600

800

(25.0

)

600

600

-

Net Interest Income after Provision for Loan Losses

16,531

16,642

(0.7

)

16,531

14,163

16.7

Noninterest Income

634

857

(26.0

)

634

387

63.8

Noninterest Expense

7,885

11,040

(28.6

)

7,885

6,532

20.7

Income Before Income Taxes

9,280

6,459

43.7

9,280

8,018

15.7

Provision (Benefit) for Income Taxes

2,262

(1,302

)

273.7

2,262

2,068

9.4

Net Income

$

7,018

$

7,761

(9.6

)

$

7,018

$

5,950

17.9

Income Statement

Net Interest Income

Net interest income was $17.1 million for the first quarter of 2019, a
decrease of $311,000, or 1.8%, from $17.4 million in the fourth quarter
of 2018, and an increase of $2.4 million, or 16.0%, from $14.8 million
in the first quarter of 2018. The linked-quarter decrease in net
interest income was due to continued pressure from rising deposit and
borrowing costs, as well as decreased loan fees recognized during the
period. The year-over-year increase in net interest income was largely
attributable to growth in average interest earning assets, which
increased by 23.4% to $1.99 billion for the first quarter of 2019, from
$1.61 billion for the first quarter of 2018. This increase in average
interest earning assets was primarily due to continued organic growth in
the loan portfolio.

Net interest margin (on a fully tax-equivalent basis) for the first
quarter of 2019 was 3.54%, a decrease from 3.62% in the fourth quarter
of 2018 and from 3.77% in the first quarter of 2018. While net interest
margin has benefitted from the repricing of variable-rate loans and the
origination of new loans at higher rates, it compressed due to decreased
loan fees recognized and increased rates on deposits and borrowings.

Interest income was $24.3 million for the first quarter of 2019, an
increase of $279,000, or 1.2%, from $24.0 million in the fourth quarter
of 2018, and an increase of $5.6 million, or 29.7%, from $18.7 million
in the first quarter of 2018. The yield on interest earning assets (on a
fully tax-equivalent basis) rose to 4.99% in the first quarter of 2019,
compared to 4.96% in the fourth quarter of 2018 and 4.76% in the first
quarter of 2018.

Loan interest income and loan fees remain the primary contributing
factors to the increase in yield on interest earning assets, driving the
aggregate loan yield 16 basis points higher from 5.11% in the first
quarter of 2018 to 5.27% in the fourth quarter of 2018 and 5.27% in the
first quarter of 2019. As the composition of the aggregate loan yield
has shifted, solid loan growth at yields accretive to the existing
portfolio yield has enabled the Company to offset the decrease in loan
fee income. While deferred loan fees are regularly amortized into
income, fluctuations in the level of loan fees recognized can vary based
on prepayments and other factors. In addition, in an effort to manage
loan growth commensurate with deposit growth, the Company was more
active in participating new loan originations, which resulted in sharing
loan fees and subsequently reducing the amount of loan fees that would
otherwise contribute to the aggregate loan yield.

A summary of interest and fees recognized on loans for the dates
indicated is as follows:

Three Months Ended

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

Interest

5.07

%

4.98

%

4.87

%

4.80

%

4.74

%

Fees

0.20

0.29

0.38

0.49

0.37

Yield on Loans

5.27

%

5.27

%

5.25

%

5.29

%

5.11

%

Interest expense was $7.1 million for the first quarter of 2019, an
increase of $590,000, or 9.0%, from $6.5 million in the fourth quarter
of 2018, and an increase of $3.2 million, or 80.8%, from $3.9 million in
the first quarter of 2018. The cost of interest bearing liabilities
increased to 2.06% in the first quarter of 2019 from 1.92% in the fourth
quarter of 2018, and 1.37% in the first quarter of 2018. The increase is
due to higher costs and repricing of deposits and borrowings during both
periods.

A summary of the Company’s average balances, interest yields and rates,
and net interest margin for the three months ended March 31, 2019,
December 31, 2018, and March 31, 2018 is as follows:

For the Three Months Ended

March 31, 2019

December 31, 2018

March 31, 2018

Average

Interest

Yield/

Average

Interest

Yield/

Average

Interest

Yield/

Balance

& Fees

Rate

Balance

& Fees

Rate

Balance

& Fees

Rate

(dollars in thousands)

Interest Earning Assets:

Cash Investments

$

27,945

$

87

1.27

%

$

21,249

$

63

1.18

%

$

21,693

$

49

0.92

%

Investment Securities:

Taxable Investment Securities

138,397

973

2.85

140,858

918

2.59

119,218

633

2.15

Tax-Exempt Investment Securities (1)

110,463

1,173

4.31

114,356

1,196

4.15

114,828

1,183

4.18

Total Investment Securities

248,860

2,146

3.50

255,214

2,114

3.29

234,046

1,816

3.15

Loans (2)

1,707,908

22,179

5.27

1,654,415

21,978

5.27

1,353,031

17,048

5.11

Federal Home Loan Bank Stock

7,911

100

5.12

7,759

83

4.24

5,393

45

3.38

Total Interest Earning Assets

1,992,624

24,512

4.99

%

1,938,637

24,238

4.96

%

1,614,163

18,958

4.76

%

Noninterest Earning Assets

18,550

10,272

11,586

Total Assets

$

2,011,174

$

1,948,909

$

1,625,749

Interest Bearing Liabilities:

Interest Bearing Transaction Deposits

181,033

232

0.52

%

173,825

197

0.45

%

168,509

113

0.27

%

Savings and Money Market Deposits

414,811

1,766

1.73

426,185

1,675

1.56

354,009

756

0.87

Time Deposits

329,511

1,880

2.31

301,372

1,633

2.15

298,333

1,223

1.66

Brokered Deposits

292,067

1,825

2.53

265,523

1,614

2.41

211,058

917

1.76

Federal Funds Purchased

24,956

160

2.59

50,228

315

2.49

28,511

118

1.68

Notes Payable

14,500

121

3.38

15,000

152

4.02

16,500

152

3.74

FHLB Advances

124,000

775

2.54

95,467

559

2.32

68,278

299

1.78

Subordinated Debentures

24,647

377

6.20

24,621

401

6.46

24,544

369

6.10

Total Interest Bearing Liabilities

1,405,525

7,136

2.06

%

1,352,221

6,546

1.92

%

1,169,742

3,947

1.37

%

Noninterest Bearing Liabilities:

Noninterest Bearing Transaction Deposits

369,912

370,792

295,587

Other Noninterest Bearing Liabilities

9,893

10,642

11,102

Total Noninterest Bearing Liabilities

379,805

381,434

306,689

Shareholders' Equity

225,844

215,254

149,318

Total Liabilities and Shareholders' Equity

$

2,011,174

$

1,948,909

$

1,625,749

Net Interest Income / Interest Rate Spread

17,376

2.93

%

17,692

3.04

%

15,011

3.39

%

Net Interest Margin (3)

3.54

%

3.62

%

3.77

%

Taxable Equivalent Adjustment:

Tax-Exempt Investment Securities

(245

)

(250

)

(248

)

Net Interest Income

$

17,131

$

17,442

$

14,763

(1)

Interest income and average rates for tax-exempt investment
securities are presented on a tax-equivalent basis, assuming a
statutory federal income tax rate of 21%.

(2)

Average loan balances include nonaccrual loans. Interest income on
loans includes amortization of deferred loan fees, net of deferred
loan costs.

(3)

Net interest margin includes the tax equivalent adjustment and
represents the annualized results of: (i) the difference between
interest income on interest earning assets and the interest expense
on interest bearing liabilities, divided by (ii) average interest
earning assets for the period.

Provision for Loan Losses

A reconciliation of the Company’s allowance for loan losses for the
three months ended March 31, 2019, December 31, 2018 and March 31, 2018
is as follows:

Three Months Ended

Three Months Ended

March 31,

December 31,

March 31,

March 31,

(dollars in thousands)

2019

2018

2019

2018

Balance at Beginning of Period

$

20,031

$

18,949

$

20,031

$

16,502

Provision for Loan Losses

600

800

600

600

Charge-offs

(36

)

(37

)

(36

)

(12

)

Recoveries

12

319

12

31

Balance at End of Period

$

20,607

$

20,031

$

20,607

$

17,121

Noninterest Income

Noninterest income was $634,000 for the first quarter of 2019, a
decrease of $223,000 from $857,000 for the fourth quarter of 2018, and
an increase of $247,000 from $387,000 for the first quarter of 2018.

The following table presents the major components of noninterest income
for the dates indicated:

Three Months Ended

Three Months Ended

March 31,

December 31,

Increase/

March 31,

March 31,

Increase/

(dollars in thousands)

2019

2018

(Decrease)

2019

2018

(Decrease)

Noninterest Income:

Customer Service Fees

$

191

$

206

$

(15

)

$

191

$

170

$

21

Net Gain (Loss) on Sales of Securities

(5

)

(17

)

12

(5

)

—

(5

)

Net Gain (Loss) on Sales of Foreclosed Assets

—

—

—

—

4

(4

)

Letter of Credit Fees

246

482

(236

)

246

70

176

Debit Card Interchange Fees

88

104

(16

)

88

92

(4

)

Other Income

114

82

32

114

51

63

Totals

$

634

$

857

$

(223

)

$

634

$

387

$

247

Noninterest Expense

Noninterest expense was $7.9 million for the first quarter of 2019, a
decrease of $3.2 million from $11.0 million for the fourth quarter of
2018, and an increase of $1.4 million from $6.5 million for the first
quarter of 2018. The decrease from the fourth quarter of 2018 was
primarily driven by a $3.1 million reduction in the amortization of tax
credit investments. The increase from the first quarter of 2018 was
attributed to investments in employees, technology, marketing, and other
operating costs to meet the needs of the Company’s growth.

The following table presents the major components of noninterest expense
for the dates indicated:

Three Months Ended

Three Months Ended

March 31,

December 31,

Increase/

March 31,

March 31,

Increase/

(dollars in thousands)

2019

2018

(Decrease)

2019

2018

(Decrease)

Noninterest Expense:

Salaries and Employee Benefits

$

4,802

$

5,086

$

(284

)

$

4,802

$

4,318

$

484

Occupancy and Equipment

656

584

72

656

574

82

FDIC Insurance Assessment

285

240

45

285

270

15

Data Processing

153

145

8

153

32

121

Professional and Consulting Fees

388

289

99

388

301

87

Information Technology and Telecommunications

236

258

(22

)

236

183

53

Marketing and Advertising

465

431

34

465

284

181

Intangible Asset Amortization

48

48

—

48

48

—

Amortization of Tax Credit Investments

177

3,278

(3,101

)

177

—

177

Other Expense

675

681

(6

)

675

522

153

Totals

$

7,885

$

11,040

$

(3,155

)

$

7,885

$

6,532

$

1,353

The Company had 143 full-time equivalent employees at March 31, 2019,
compared to 140 employees at December 31, 2018, and 118 employees at
March 31, 2018. The increases include key strategic hires, particularly
in deposit gathering roles, as the Company continues to capitalize on
M&A disruption. While the recognition of tax credit investments creates
volatility in the level of total noninterest expense and concurrently
the efficiency ratio, it directly reduces income tax expense and the
effective tax rate. The efficiency ratio, a non-GAAP financial measure,
was 44.1% for the first quarter of 2019, compared to 60.0% for the
fourth quarter of 2018, and 42.8% for the first quarter of 2018.
Excluding the impact of the amortization of tax credit investments, the
adjusted efficiency ratio, a non-GAAP financial measure, was 43.1% for
the first quarter of 2019, 42.1% for the fourth quarter of 2018, and
42.8% for the first quarter of 2018.

Income Taxes

The effective combined federal and state income tax rate for the first
quarter of 2019 was 24.4%, an increase from (20.2)% for the fourth
quarter of 2018, and a decrease from 25.8% for the first quarter of
2018. The higher effective combined rate in the first quarter of 2019
compared to the fourth quarter of 2018 was primarily due to the
recognition of $3.8 million of tax credit investments.

Balance Sheet

Total assets at March 31, 2019 were $2.05 billion, a 3.8% increase from
$1.97 billion at December 31, 2018, and a 21.8% increase from $1.68
billion at March 31, 2018. The increase in total assets was primarily
due to organic loan growth.

Total gross loans at March 31, 2019 were $1.72 billion, an increase of
$58.7 million, or 3.5%, over total gross loans of $1.66 billion at
December 31, 2018, and an increase of $318.2 million, or 22.6%, over
total gross loans of $1.41 billion at March 31, 2018.

The following table details the composition of the Company’s loan
portfolio, by category, at the dates indicated:

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

(dollars in thousands)

Commercial and Industrial

$

284,807

$

260,833

$

235,502

$

204,072

$

199,262

Construction and Land Development

178,782

210,041

187,919

164,492

147,842

Real Estate Mortgage:

1 - 4 Family Mortgage

233,131

226,773

224,124

213,265

200,573

Multifamily

417,975

407,934

389,511

340,888

332,770

CRE Owner Occupied

66,130

64,458

65,905

65,891

67,512

CRE Nonowner Occupied

538,998

490,632

492,499

470,437

453,498

Total Real Estate Mortgage Loans

1,256,234

1,189,797

1,172,039

1,090,481

1,054,353

Consumer and Other

3,806

4,260

4,504

4,275

3,963

Total Loans, Gross

1,723,629

1,664,931

1,599,964

1,463,320

1,405,420

Allowance for Loan Losses

(20,607)

(20,031)

(18,949)

(17,666)

(17,121)

Net Deferred Loan Fees

(4,791)

(4,515)

(4,308)

(4,058)

(4,130)

Total Loans, Net

$

1,698,231

$

1,640,385

$

1,576,707

$

1,441,596

$

1,384,169

Total deposits at March 31, 2019 were $1.64 billion, an increase of
$82.7 million, or 5.3%, over total deposits of $1.56 billion at December
31, 2018, and an increase of $290.6 million, or 21.5%, over total
deposits of $1.35 billion at March 31, 2018.

The following table details the composition of the Company’s deposit
portfolio, by category, at the dates indicated:

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

(dollars in thousands)

Noninterest Bearing Transaction Deposits

$

404,937

$

369,203

$

342,292

$

323,320

$

315,036

Interest Bearing Transaction Deposits

180,459

179,567

175,455

178,045

164,899

Savings and Money Market Deposits

434,186

402,639

416,140

381,942

339,541

Time Deposits

346,163

318,356

290,887

300,701

304,743

Brokered Deposits

277,921

291,169

254,314

230,683

228,817

Total Deposits

$

1,643,666

$

1,560,934

$

1,479,088

$

1,414,691

$

1,353,036

Total shareholders’ equity at March 31, 2019 was $231.8 million, an
increase of $10.8 million, or 4.9%, over total shareholders’ equity of
$221.0 million at December 31, 2018, and an increase of $32.8 million,
or 16.4%, over total shareholders’ equity of $199.0 million at March 31,
2018. The increase in total shareholders’ equity was primarily due to
net income retained.

Tangible book value per share, a non-GAAP financial measure, was $7.58
as of March 31, 2019, an increase of 5.0% from $7.22 as of December 31,
2018, and an increase of 16.7% from $6.49 as of March 31, 2018.

Asset QualityAsset quality metrics
for the Company remained strong at March 31, 2019. Annualized net
charge-offs (recoveries) as a percent of average loans for the first
quarter of 2019 were 0.01%, compared to (0.07)% for the fourth quarter
of 2018, and (0.01)% for the first quarter of 2018. At March 31, 2019,
the Company’s nonperforming assets, which include nonaccrual loans and
foreclosed assets, were $1.6 million, or 0.08% of total assets, as
compared to $581,000, or 0.03% of total assets at December 31, 2018, and
$1.4 million, or 0.08% of total assets at March 31, 2018.

About the Company

Bridgewater Bancshares, Inc. is a financial holding company
headquartered in Bloomington, Minnesota. The Company has two wholly
owned subsidiaries, Bridgewater Bank, a Minnesota-chartered commercial
bank founded in November 2005, and Bridgewater Risk Management, Inc., a
captive insurance company founded in December 2016. Bridgewater Bank has
two wholly owned subsidiaries, Bridgewater Investment Management, Inc.
and BWB Holdings, LLC. Bridgewater Bank currently operates through 7
branches in Bloomington, Greenwood, Minneapolis (2), St. Louis Park,
Orono, and St. Paul, all located within the Minneapolis-St.
Paul-Bloomington metropolitan statistical area.

Use of Non-GAAP financial measures

In addition to the results presented in accordance with U.S. Generally
Accepted Accounting Principles (GAAP), the Company routinely supplements
its evaluation with an analysis of certain non-GAAP financial measures.
The Company believes these non-GAAP financial measures, in addition to
the related GAAP measures, provide meaningful information to investors
to help them understand the Company’s operating performance and trends,
and to facilitate comparisons with the performance of peers. These
disclosures should not be viewed as a substitute for operating results
determined in accordance with GAAP, nor are they necessarily comparable
to non-GAAP performance measures that may be presented by other
companies. Reconciliations of non-GAAP disclosures used in this earnings
release to the comparable GAAP measures are provided in the accompanying
tables.

Forward-Looking Statements

This earnings release contains “forward-looking statements” within the
meaning of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
without limitation, statements concerning plans, estimates,
calculations, forecasts and projections with respect to the anticipated
future performance of the Company. These statements are often, but not
always, identified by words such as “may”, “might”, “should”, “could”,
“predict”, “potential”, “believe”, “expect”, “continue”, “will”,
“anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”,
“would”, “annualized”, “target” and “outlook”, or the negative version
of those words or other comparable words of a future or forward-looking
nature. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on our
current beliefs, expectations and assumptions regarding our business,
future plans and strategies, projections, anticipated events and trends,
the economy and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to
predict and many of which are outside of our control. Our actual results
and financial condition may differ materially from those indicated in
the forward-looking statements. Therefore, you should not rely on any of
these forward-looking statements. Important factors that could cause our
actual results and financial condition to differ materially from those
indicated in the forward-looking statements include, among others, the
following: loan concentrations in our portfolio; the overall health of
the local and national real estate market; our ability to successfully
manage credit risk; business and economic conditions generally and in
the financial services industry, nationally and within our market area;
our ability to maintain an adequate level of allowance for loan losses;
our high concentration of large loans to certain borrowers; our ability
to successfully manage liquidity risk; our dependence on non-core
funding sources and our cost of funds; our ability to raise additional
capital to implement our business plan; our ability to implement our
growth strategy and manage costs effectively; the composition of our
senior leadership team and our ability to attract and retain key
personnel; the occurrence of fraudulent activity, breaches or failures
of our information security controls or cybersecurity-related incidents;
interruptions involving our information technology and
telecommunications systems or third-party servicers; competition in the
financial services industry; the effectiveness of our risk management
framework; the commencement and outcome of litigation and other legal
proceedings and regulatory actions against us; the impact of recent and
future legislative and regulatory changes; interest rate risk;
fluctuations in the values of the securities held in our securities
portfolio; the imposition of tariffs or other governmental policies
impacting the value of products produced by our commercial borrowers;
and any other risks described in the “Risk Factors” sections of other
reports filed by the Company with the Securities and Exchange
Commission. Any forward-looking statement made by us in this press
release is based only on information currently available to us and
speaks only as of the date on which it is made. We undertake no
obligation to publicly update any forward-looking statement, whether
written or oral, that may be made from time to time, whether as a result
of new information, future developments or otherwise.

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

March 31,

December 31,

March 31,

2019

2018

2018

(Unaudited)

(Unaudited)

ASSETS

Cash and Cash Equivalents

$

48,750

$

28,444

$

20,125

Bank-Owned Certificates of Deposits

2,948

3,305

3,803

Securities Available for Sale, at Fair Value

250,285

253,378

236,819

Loans, Net of Allowance for Loan Losses of 20,607 at March 31, 2019,
$20,031 at December 31, 2018 and $17,121 at March 31, 2018

1,698,231

1,640,385

1,384,169

Federal Home Loan Bank (FHLB) Stock, at Cost

7,324

7,614

5,214

Premises and Equipment, Net

15,697

13,074

10,151

Foreclosed Assets

—

—

288

Accrued Interest

7,058

6,589

5,753

Goodwill

2,626

2,626

2,626

Other Intangible Assets, Net

1,004

1,052

1,195

Other Assets

14,188

17,274

11,454

Total Assets

$

2,048,111

$

1,973,741

$

1,681,597

LIABILITIES AND EQUITY

LIABILITIES

Deposits:

Noninterest Bearing

$

404,937

$

369,203

$

315,036

Interest Bearing

1,238,729

1,191,731

1,038,000

Total Deposits

1,643,666

1,560,934

1,353,036

Federal Funds Purchased

—

18,000

9,000

Notes Payable

14,500

15,000

16,500

FHLB Advances

124,000

124,000

73,000

Subordinated Debentures, Net of Issuance Costs

24,656

24,630

24,552

Accrued Interest Payable

1,679

1,806

1,085

Other Liabilities

7,835

8,373

5,385

Total Liabilities

1,816,336

1,752,743

1,482,558

SHAREHOLDERS' EQUITY

Preferred Stock- $0.01 par value

Authorized 10,000,000; None Issued and Outstanding at March 31, 2019
(unaudited), December 31, 2018 and March 31, 2018 (unaudited)

—

—

—

Common Stock- $0.01 par value

Common Stock - Authorized 75,000,000; Issued and Outstanding
30,097,674 at March 31, 2019 (unaudited), 30,097,274 at December 31,
2018 and 27,235,832 at March 31, 2018 (unaudited)

301

301

272

Non-voting Common Stock- Authorized 10,000,000; Issued and
Outstanding -0- at March 31, 2019 (unaudited) and December 31, 2018
and 2,823,542 at March 31, 2018 (unaudited)

—

—

28

Additional Paid-In Capital

126,209

126,031

125,326

Retained Earnings

103,252

96,234

75,264

Accumulated Other Comprehensive Income (Loss)

2,013

(1,568

)

(1,851

)

Total Shareholders' Equity

231,775

220,998

199,039

Total Liabilities and Equity

$

2,048,111

$

1,973,741

$

1,681,597

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

Three Months Ended

Three Months Ended

March 31,

December 31,

March 31,

March 31,

2019

2018

2019

2018

INTEREST INCOME

Loans, Including Fees

$

22,179

$

21,978

$

22,179

$

17,048

Investment Securities

1,901

1,864

1,901

1,567

Other

187

146

187

95

Total Interest Income

24,267

23,988

24,267

18,710

INTEREST EXPENSE

Deposits

5,703

5,119

5,703

3,009

Notes Payable

121

152

121

152

FHLB Advances

775

559

775

299

Subordinated Debentures

377

401

377

369

Federal Funds Purchased

160

315

160

118

Total Interest Expense

7,136

6,546

7,136

3,947

NET INTEREST INCOME

17,131

17,442

17,131

14,763

Provision for Loan Losses

600

800

600

600

NET INTEREST INCOME AFTER

PROVISION FOR LOAN LOSSES

16,531

16,642

16,531

14,163

NONINTEREST INCOME

Customer Service Fees

191

206

191

170

Net Loss on Sales of Available for Sale Securities

(5

)

(17

)

(5

)

—

Net Gain on Sales of Foreclosed Assets

—

—

—

4

Other Income

448

668

448

213

Total Noninterest Income

634

857

634

387

NONINTEREST EXPENSE

Salaries and Employee Benefits

4,802

5,086

4,802

4,318

Occupancy and Equipment

656

584

656

574

Other Expense

2,427

5,370

2,427

1,640

Total Noninterest Expense

7,885

11,040

7,885

6,532

INCOME BEFORE INCOME TAXES

9,280

6,459

9,280

8,018

Provision (Benefit) for Income Taxes

2,262

(1,302

)

2,262

2,068

NET INCOME

$

7,018

$

7,761

$

7,018

$

5,950

EARNINGS PER SHARE

Basic

$

0.23

$

0.26

$

0.23

$

0.23

Diluted

0.23

0.25

0.23

0.23

Dividends Paid Per Share

—

—

—

—

Bridgewater Bancshares, Inc. and Subsidiaries

Summary Quarterly Consolidated Financial Data

(dollars in thousands)

As of and for the Three Months Ended

March 31,

December 31,

March 31,

2019

2018

2018

Selected Asset Quality Data

Loans 30-89 Days Past Due

$

387

$

311

$

19

Loans 30-89 Days Past Due to Total Loans

0.02

%

0.02

%

0.00

%

Nonperforming Loans

$

1,557

$

581

$

1,128

Nonperforming Loans to Total Loans

0.09

%

0.03

%

0.08

%

Foreclosed Assets

$

—

$

—

$

288

Nonaccrual Loans to Total Loans

0.09

%

0.03

%

0.08

%

Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to
Total Loans

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